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You’ve likely heard throughout your adolescent and (even) adult years that buying real estate should be a top priority. This message isn’t wrong, as time and time again real estate has proven to be a solid investment. But – how do you know if you’re ready to take the plunge into homeownership?

We’ve established this list of tell-tale signs that you are ready to buy your first home. It’s important to note that there is no perfect time to buy a home, but if you meet these requirements, you should be in an exceptional position to start shopping!

You have a stable income

This is the most important factor. Not only should you feel confident that your income will be stable for the next few years, but you should also have a history showing your income level and stability for a minimum of two years. Lenders will ask for proof of this history and will also use your income level as a measure of affordability when completing your mortgage pre-approval.

You have no debt, or have a spending plan to manage your existing debt

This is important for a few reasons. The first has to do with your credit history and score. Having a large car payment, for example, will affect the amount that you are pre-approved for on a house, which will impact the budget you have for buying a new home. The amount of monthly debt payment obligations will impact what is called your “debt-to-income ratio.” Did you know that for every $400 in monthly payments you have, this will impact your purchasing power by $100,000? Paying down as much debt as possible before buying a home will help you avoid this and will also help you with budgeting an entirely new set of expenses once you are a homeowner!

You have your down payment and closing costs saved

Your lender will want to see a history of your down payment for a minimum of 90 days prior to the application date. A down payment can be as little as 5% of the purchase price. You will also want to have an additional 1-2% saved for closing costs. This includes legal fees, land transfer tax, and HST on your mortgage default insurance.

You have an emergency fund

Being a homeowner can bring a whole new meaning to the word “emergency.” Furnaces break, ceilings leak, and floods happen! You’ll want to be prepared for the worst and an emergency fund is the best way to protect yourself (and your debt load)! Having 3-6 months of expenses can be a great way to start. Make a list of everything that comes out of your bank account every month, total the numbers and multiply this by three! Should an emergency happen, or you have an interruption in your income – you can breathe a sigh of relief and rely on this fund!

You are committed to living in one area long term

If you’re thinking of buying in a certain area, it’s a good idea to get familiar with the neighbourhood to ensure you’ll want to reside there long term! A great way to do this is to rent in the neighbourhood or talk to a real estate agent that specializes in that area. Find out what they like and dislike, check out the local restaurants and shops, and get a good sense of how you will feel living in the area for the next 5-7 years. You don’t need to stay in your home for this long, but you should still be sure you love your area before you buy a home.

Becoming a homeowner is an exciting milestone, and you’ll want to make sure you’re equipped with the tools for a smooth transition into this new chapter of your life!

If you’re ready to take the leap, your next step is to find a savvy Bosley Agent willing to do the footwork for you and support you on this journey! To connect with a Bosley Agent today!


Christan Bosley

Bosley Real Estate Ltd. is a full-service, 4th generation brokerage operating since 1928 with offices serving the Greater Toronto Area, Niagara, Waterloo Region, Southern Georgian Bay and Northumberland.

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